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A mission in health insurance has Fidelis Care growing fast in Amherst

Fidelis Care New York was running out of room in its longtime home in the Audubon Industrial Park in Amherst in 2010, so the church-sponsored health plan moved into a building with twice as much space down the road in an office park in Getzville.

But just three years later, the company had again outgrown its offices. Fidelis Care officials decided to expand into a new facility, built to house a data center serving its statewide operations next door to their existing office in the sprawling CrossPoint Business Park.

The two buildings are now home to 1,124 employees, or 39 percent of Fidelis Care’s workforce in New York, with claims representatives, member services representatives and information technology employees.

Long known as a provider of government-sponsored insurance plans, Fidelis Care has expanded its presence across the state at a time when some other insurers, including some of the region’s dominant nonprofits, are retreating on managed Medicaid coverage.

And the company, operated by the eight Catholic dioceses of New York, has been a hit on the NY State of Health exchange. Fidelis Care ranked as the most-popular insurer across the state on the marketplace for the enrollment period that ended in February.

The Rev. Patrick J. Frawley, the company’s president and CEO, said Western New York remains a big part of the insurer’s future.

“This is our nerve center here,” said the voluble Frawley said.

Sense of mission

Fidelis Care has a long history of providing coverage to children, the elderly and the needy.

The insurer was launched in 1993 by the Catholic Medical Center in Brooklyn and Queens with the backing of the Catholic Diocese of Brooklyn.

Fidelis Care was serving just 17,000 Medicaid members in New York City when the company in 1997 opted to acquire Better Health Plan, the Buffalo-based, health maintenance organization, a move that tripled its membership.

“We really didn’t even have the money to do it. We had a capitalization plan. There were some sleepless nights,” Frawley said. “It is what made our mission successful. We would not have made it.”

Fidelis Care officials were encouraged to act by then-Gov. George E. Pataki’s policies of fostering competition in the state’s insurance marketplace and of shifting the state’s costly Medicaid program to one managed by insurance companies.

Fidelis Care later expanded into Child Health Plus, Family Health Plus, and Medicare Advantage, eventually reaching into each of the state’s 62 counties.

Unlike most other insurance companies in the state, Fidelis Care does not offer commercial coverage to large companies or small businesses.

Executives say they feel a sense of mission in offering coverage through the government-sponsored programs. And membership in Fidelis Care’s lines of business rose steadily, from 256,142 in 2005 to 673,752 five years later to 1.3 million today.

Starting in Buffalo

Fidelis Care’s purchase of Better Health Plan gave the insurer a toehold in Buffalo, but the company had plenty of reasons to stay and expand here in the 18 years since.

In the past five years it has grown from 430 employees in Amherst to more than 1,100.

The Amherst Industrial Development Agency approved $2.9 million in tax breaks for the first building in CrossPoint Business Park in 2011, and $2.5 million in tax breaks for the second building, which opened in January.

“I think they’re a good corporate citizen that’s dedicated to workforce development, and they do have a reputation for good employee relations, training and building opportunity for their associates,” said Colleen C. DiPirro, president and CEO of the Amherst Chamber of Commerce. “We’re happy to see a company that has put roots in Western New York and continues to grow and to honor their commitment to Western New York.”

Getzville hosts Fidelis Care’s largest office-based staff, with employees working in claims — they and their New York City counterparts handle about 1.5 million claims per month — member services, clinical management and information technology, and the insurer regularly is training new employees to come on board, Mark Griffith, assistant vice president of materials management and support services, said on a recent tour of the facility. Fidelis Care has about 250 vacant positions that it is seeking to fill, from entry-level call center up to senior management jobs.

The statewide data center in the new building holds 1,500 computer servers, and access is strictly controlled. Employees must scan their ID cards and handprints to get into the room.

“This is the data center for everything,” said Martin Krebs, the chief information officer, the highest-ranking Fidelis Care executive based in the Getzville office. Of the almost 400 employees in Fidelis Care’s information technology division, just under 300 are in Buffalo, where they work three different shifts around the clock to help support the company’s website and other IT operations.

Fidelis Care has room to double the size of the data center if the need arises in the future, he said.

Getzville is Fidelis Care’s second-largest location, after Queens. The company also has 250 or so employees in Albany and about 100 employees in Syracuse, along with a handful of satellite sites.

Frawley said having offices across the state proves beneficial when there’s a blizzard in Buffalo, or a blackout in New York City.

“We are a statewide plan and we wanted to have a statewide presence,” Frawley said.

Expanding coverage

Two years ago, Fidelis Care ventured into a new line of business, entering the state’s health insurance marketplace that opened in fall 2013.

It was a big change for the insurer, which didn’t sell individual coverage outside of the government-sponsored programs.

But David P. Thomas, the company’s chief operating officer, said offering insurance through the NY State of Health exchange was consistent with the insurer’s goal of serving low-income New Yorkers who didn’t qualify for Medicaid or commercial coverage through an employer. Also, he said, the Family Health Plus plan that Fidelis Care had offered was ending.

“So they were sort of left out in the cold,” Thomas said.

The insurance marketplaces that opened in New York and across the country were high-profile components of President Obama’s health care reform efforts and were meant to provide access to affordable health insurance.

By the end of the second exchange enrollment period in February, Fidelis Care was the most-popular private insurer across the state, enrolling 20 percent of individual exchange members, just ahead of Health Republic Insurance, according to the state Health Department.

In this area, Fidelis Care ranked third in exchange enrollment, behind Health Republic and BlueCross BlueShield of Western New York. One reason Fidelis Care was attractive to enrollees was its generally low monthly premiums.

“I think we priced at a level where it was affordable to folks. We got enough membership to make it work from an administrative perspective, and then, 2015, being the second year, has been successful. It’s been successful enough that we’re looking to continue to grow our presence in the exchange products,” Thomas said.

Health Republic, which also featured relatively low monthly premiums and saw success on the exchange, was forced to stop doing business this fall after state and federal regulators raised concerns over mounting financial losses.

Fidelis Care executives see an opportunity to gain membership following the demise of Health Republic, and say they don’t worry about the sustainability of the rates they set for their exchange products.

“I think Fidelis and Health Republic are two very, very different plans,” agreed Leslie S. Moran, senior vice president for the New York Health Plan Association, a trade group for the state’s health insurers. “There were numerous reasons, numerous factors, that ultimately led to Health Republic’s shutdown. And I don’t think Fidelis is facing those same challenges. They’re a much more established company, and have a much longer history.”

Medicaid opportunity

Medicaid remains a growing line of business for Fidelis Care even as other area health insurers are scaling back their own managed Medicaid offerings.

BlueCross BlueShield of Western New York in summer 2014 announced its intention to exit the managed Medicaid and Child Health Plus programs, citing steep losses, before putting those plans on hold pending talks of a strategic partnership with an unnamed entity that have not yet been announced.

Univera Healthcare, effective Aug. 1, turned over control of its Univera Community Health operation, which served 54,000 Medicaid and Child Health Plus members in four Western New York counties, to its Rochester-area partner.

And Independent Health last month said it was pulling out of managed Medicaid in Niagara County because of ongoing losses.

Moran said Medicaid isn’t the primary book of business for Independent Health and the other commercial insurers, so they don’t have the scale for it to make sense to stay in the program.

For example, HealthNow New York, the parent company of BlueCross BlueShield of Western New York, earned $219.3 million in managed Medicaid revenue in 2014 — less than 10 percent of its $2.46 billion in net premium revenue that year — but lost $11.4 million on the program.

And Excellus BlueCross BlueShield, Univera’s parent, earned $799.6 million in managed Medicaid revenue last year — 13.5 percent of its net premium revenue for 2014 — and lost $23.4 million on that program.

For Fidelis Care, however, Medicaid is its primary line of business. The insurer earned $4.4 billion in managed Medicaid premiums in 2014 — 81 percent of its revenue — and earned $319.9 million in profits in its managed Medicaid program last year.

“As I said, it is tough business. But it’s why we’re in business, to make sure people maintain coverage,” Frawley said.

email: swatson@buffnews.com